Tag: economics

I’ve been playing Angry Birds lately. I’m good at it, in the sense that I’m able to beat a game that was designed to be beaten by children. I get past every level, with one, two, or three stars. After I finish a group of levels this way, I go back and try and get 3 stars on all the levels where I didn’t the first time.

One thing I do to help with this is to pay attention to my points-per-bird average (good old PPB). If I need 100,000 points to pass a level, and I have 3 birds, I need 34,000 PPB. This matters, because if I only get 6,000 on the first bird, it is probably not worth my time to keep going on that level — I should hit restart. This is a good strategy, and gets me 3 stars often.

There’s a hidden assumption here: that throws are independent. This is not always true. Sometimes I need to take a lower PPB on the first bird to set me up for the next throw. If I get 6,000 on the first throw, but that exposes a box of TNT and I can get 90,000 on the second, then my standard of “6,000 PPB is too low” is flawed for that level (even though it’s a good idea for a starting point). If I don’t get 3 stars on a level with my PPB strategy within 15 minutes, I start looking for other openings.

Question hidden assumptions. It’s what Richard Feynman did, with his belief that all problems should be solved from first principles. He’d take even the most basic and widely accepted answers, strip them down, and re-derive the answers himself. I think it’s one of the things that led to him being so effective (a lot of people consider him a modern day Einstein, except his discoveries aren’t as consumer-friendly as e=mc^2, so he doesn’t have the same pop culture awareness). In doing this, he’d run into all sorts of assumptions that people were making (without realizing it), sometimes leading them away from a useful piece of information.

As I mentioned, I was at this investment meeting last week. They gave us a bunch of papers, and being a giant nerd, I actually read the stuff. (Hey, I do want to retire, and sooner rather than later)

There were a few things I read that I think are interesting for the long term.

According to the Employee Benefit Research Institute and the US Bureau of the Census, we’re gonna have a lot of old people soon. Yeah, big surprise. Well, let’s put some numbers to it. Here’s the number of people over 65.

1990 – 31.2 million

2000 – 35.0 million

2010 – 40.2 million

2020 – 54.6 million

2030 – 71.5 million

We’re going to nearly double the number of old people in the next 20 years. Buy stock in Ensure. No, really. Buy stock in companies that make stuff for old people. That’s one of the big reasons people are freaking out about health-care. We’re going to need lots more doctors & medical technology, and the price is going up. Apparently, health-care costs are currently increasing 3x faster than the Consumer Price Index.

Oh also, old people? Thanks for taking care of Social Security. And by “taking care”, I mean “can we get some health-care to replace Social Security’s kneecaps after that cool thing you did with the crowbar?” You people just can’t handle credit, can you?

In the early 90s, Sweden had a financial crisis. In the 80s, they had a credit boom which produced high consumer spending and real estate prices. They had a currency crisis, in the 90s, and the boom was reversed. Sounds a bit like now. I think this is what the US is looking to as a model for our current crisis, because Sweden was able to solve their problem in only a few years. They nationalized 22% of banking assets, and then created some private companies to help come up with values for, and sell off the bad assets. I hope it works in our case.

Basically, it’s a braindead-simple way to reduce water and electricity/gas usage, with no inconvenience to you. Plus, I always seem to take quicker showers, which means I can clear out another blog or two from my RSS feeds.

Before I go off from this, I wanted to share a trick, if you’re interested in trying this out.

Pro tip: I recommend not shutting off the water completely. I find it is useful to wash soap off of your hand when you want to go turn the handle — very slippery otherwise. The Navy probably has foot-activated water valves.

Anyways, this navy shower concept got me thinking about minimizing consumption and efficiently using resources. It’s an economics issue — how do I get the most use/value out of a fixed amount of resources? From here, I started thinking about business.

It should be no surprise that businesses want to minimize use of resources. The less they have to spend on getting raw materials, the more those resources can be applied to other things, like salaries, and stock dividends. It’s even more aggressive in small businesses with slim margins, where becoming more efficient can mean the ability to hire more employees and grow, or purchase better equipment.

And this is where capitalism and the eco-movement intersect. Going with the “saving water” idea; let’s say you’re a business that makes Gadgets, and it takes 1000 gallons of water to make a Gadget. If you figure out how to make a Gadget with 600 gallons of water, you’ve already got a savings on your hands. One of your costs has been cut by 40%. Hooray! Fire up the yacht!

This is how businesses have worked for a very long time. “Efficient use of resources” should be a mantra in every group. But now with the eco-movement, companies are doubly-motivated to use resources more efficiently. Because now, when they become more efficient, they can advertise their “greenness” and get a PR boost on top of their new found financial savings. Some of them even charge more for their new “green” product, giving them a bigger return on the investment.

So that’s it. Your daily dose of economics and business. Of course, if you still want to do more to reduce your use of resources, try navy showering with a friend.